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Federal prosecutors want former WorldCom boss Bernard Ebbers to go to
prison for the rest of his life, urging a judge to brush off his pleas
for leniency.

To be fair, Ebbers raises other grounds for leniency:

He has asked the judge for a sentence "substantially below" life in
prison, citing his poor health and a history of charitable works. More
than 100 people, mostly family and friends, have also written to Jones
on his behalf.

Still, I'm interested in the implicit argument that he should have a chance to get out of prison alive, so that a sentence that might be appropriate for a younger person (say, 20 years) would be inappropriate for him. I have to confess that my initial reaction is that this would be an unfair rule. After all, Ebbers has had all this time not in prison, which the younger person would not. So why should Ebbers benefit from the fact that he committed his crime later in life?

(And I might add, there is no guarantee that a 40 year old would survive a 20 year sentence. Prison is probably a high stress lifestyle.)

On the other hand, I suppose there is something in the notion of hope -- a prisoner who is not sentenced to an actual life sentence should perhaps have some reasonable hope of walking out of prison a free person one day. That might provide some incentive for good behavior, etc.

All I am questioning, therefore, is the implicit argument that compassion for the elderly should lead to their receiving lighter sentences for identical crimes than younger criminals. If we want to have compassionate sentences in general, that's fine. But just as one can make the case that a 63 year old defendant should get a break because he's old, one could argue that a 23 year defendant should get a break because he's young and can still learn from his mistake and contribute many years of productive work to society.

June 24, 2005

Yesterday's Wall Street Journal ran a short story that goes down as one of the best examples of irony (true irony, not the Alanis Morissette version).

Here it goes. Back in 1995, a corporate executive was convicted for embezzling from his company. For the sentencing hearing, the CEO of the company wrote a letter blasting the executive, calling the crime "particularly egregious," and noting that the executive stole from shareholders and breached fiduciary duties. The CEO called for the maximum term of imprisonment.

Oops. You'll notice that the letter was written by Dennis Kozlowski, who was just convicted of massive theft from Tyco, dwarfing the amount that the executive stole in 1995. Not surprisingly, prosecutors want to use Kozlowski's letter against him.

You have to wonder about the sheer chutzpah of some of these corporate criminals. Most likely, Kozlowski didn't think about looting Tyco until some time after he wrote that letter, but still, you'd think he would've remembered.

May 31, 2005

The Supreme Court reversed Andersen's (aka Arthur Andersen) obstruction of justice conviction (the opinion should be available soon here), agreeing with Andersen that the jury should have been instructed that it needed to find that Andersen acted with the knowledge that it would be obstructing an investigation by ordering the shredding of documents before receiving a subpoena from the SEC.

Of course, little good that the result does for Andersen (except perhaps in defending itself from various civil lawsuits, since those suits won't be able to use the criminal conviction anymore against the accounting/auditing firm); after the indictment, Andersen largely dissolved, with only a skeleton staff left behind to manage the lawsuits. I think most of the rainmaking partners left for the remaining big 4 accounting firms.

So the end result is that lots of lower level employees lost their jobs because of a prosecution that was deemed aggressive at the time and that ultimately turns out to have been invalid based on the way the case was presented.

March 16, 2005

"These guys are shaking in their boots now," said Andrew Genser, a
white-collar criminal defense lawyer at Kirkland & Ellis in New
York.

If anyone seemed poised to pull off the "know-nothing" defense, others said, it was Ebbers.

The former high school basketball coach and milkman twice flunked out
of college. He disdained e-mail, denying prosecutors a weapon they had
used effectively against Quattrone and others. And Ebbers almost never
sold his WorldCom shares, testifying that he even had bought $5.3
million in stock a few weeks after he was forced to resign in 2002
under the cloud of a federal investigation.

Notable boot shakers mentioned in the article are Ken Lay (Enron) and Richard Scrushy (HealthSouth). As I've blogged before, the corporate executives whose actions look really egregious (i.e., those involved in Enron, WorldCom, etc.) are slowly but steadily getting prosecuted and convicted, making it harder to see that Martha Stewart's prosecution was inevitably gender-related.

March 05, 2005

I see Martha as a victim. I mean, why aren't those sleazebags from Enron in prison? Because they're [er, providing President Bush with personal favors]. That's why. (Or is it the other way around?) Maybe if Martha [also provided such personal favors] she wouldn't have gone to prison.*

Of course, it's well within the realm of reason that Martha Stewart was singled out because she was a strong-willed woman, or that she was a staunch Democrat and big donor, but as usual, I think Occam's Razor is the best way of thinking about things.

Ken Lay (chief executive officer/Chairman of the Board) was indicted in mid-2004 in a superseding indictment naming him, Causey, and Skilling as defendants. Given his age (62 in 2004), he's probably facing a life sentence.

So actually, I think the government is doing quite well against the Enron "sleazebags."

The simplest explanation for why Martha Stewart has already served her prison term (and is now starting her home detention term) while many of the Enron types are still awaiting sentencing is that Stewart's crime was very easy to prove, whereas knowing that something went wrong at Enron is very different from proving to the jury who did exactly what. It took the DOJ time to unravel the nature of the Enron fraud and to crack insiders. Once the DOJ got Kopper to play ball, it was able to move up the food chain. There may be reasons to think that Stewart was singled out, but comparison to the Enron execs isn't really among those reasons.

* I'm not a total prude, and I'm certainly not judgmental of Mr. Jones' exhuberance, but this is something of a family-friendly blog. . . .

October 07, 2004

Here's the text of a letter sent by Martha Stewart's appellate lawyer, Walter Dellinger, to federal prosecutors, informing them of a potential Brady violation -- that is, failure to disclose potentially exculpatory information to the defendant. The upshot of the letter is to renew a request for documents that may assist Stewart on appeal, but it also gives a good sense of the appellate argument to come.

Given Dellinger's considerable experience, including service as the Solicitor General (whose office argues on behalf of the United States in the Supreme Court), it's not surprising that the letter is an example of excellent advocacy.

The only problem I noted with the letter is that it's addressed to "David N. Kelley," but the header on pages 2-10 reads "David E. Kelley." Someone has been watching too much "Boston Legal" . . . .

September 14, 2004

I dislike corporate criminals as much as the next guy and think that our current penalties for corporate crimes are inadequate (though becoming more severe post-Enron), but this is a bit much even for me:

China executes four accused of bank fraud

Beijing cracks down on financial crime ahead of big IPOs

BEIJING -- China executed four people, including employees of two of its Big Four state banks, for fraud totaling $15 million, the Xinhua state news agency said on Tuesday, amidst a high-profile campaign against financial crime.

The executions come after a string of arrests in white-collar crime as China prepares to sell shares in its big banks.

July 26, 2004

Naturally, I thought Martha Stewart's post-sentencing speech, in which she wallowed in self-pity and expressed absolutely no remorse, was obnoxious, but I will say that all of the experts who are now saying that she should just serve her 5 months for the benefit of Martha Stewart Omnimedia aren't the ones facing prison. Stewart, on the other hand, has this right:

"This is a hard thing," Stewart told CNN on July 19. "And pundits are out there saying, `Oh, she should go in.' Do they know what it's like to go to jail? I don't think they know."

The judge gave Stewart quite a gift by allowing her to remain free pending appeal. I doubt your average, run of the mill criminal defendant would have gotten such a ruling. Why shouldn't Stewart think about putting off prison? She might win on appeal, or she might die before then (morbid but true) . . . .

UPDATE (7/28): Crime & Federalism, a blog by "James Madison," has a follow-up to this post -- well, really to the comments in this post. In addressing a point raised by Law Monkey, I was not clear when I stated that "technically" Stewart was convicted of making false statements and obstructing justice, not insider trading. Mr. Madison thought that I meant "technically" in the sense that Stewart really did commit insider trading, she just wasn't charged with it; whereas, I meant "technically" in the sense that the actual crimes she was charged and convicted of were the aforementioned false statements and obstruction of justice.

In any event, this spurred Mr. Madison to write a lengthy post about the importance of "technicalities." It's worth a read. For what it's worth, I think if the jury convicted Stewart because it thought she committed insider trading, and not because she made false statements and obstructed justice, then she deserves to have her conviction reversed. On the facts of the case, however, I think the evidence that she lied to federal agents and obstructed justice was overwhelming. That's not to say the case should have been brought, as some supersmart people have argued passionately. I don't happen to be in that camp, but I think it's a reasonable point.

July 16, 2004

It's hard to attribute this break to anything other than her celebrity status. During the three years that I clerked for federal judges, I can't remember off the top of my head any case I worked on in which a convicted defendant was freed on bail pending appeal, and some of those cases didn't just present strong issues on appeal, they actually resulted in reversals.

July 07, 2004

It sounds like the last major corporate officer, Ken Lay, in the various scandals of the past few years has been indicted:

HOUSTON - Former Enron Corp. chairman and CEO Kenneth Lay has been indicted on criminal charges related to the energy company's collapse, sources close to the case told The Associated Press on Wednesday.

Lay, the company's founder, was expected to surrender to federal authorities Thursday, the sources said, speaking on condition of anonymity. Two sources said the indictment against Lay, 62, was expected to be unsealed upon or shortly after his surrender to the FBI.

Why did it take so long to indict Lay and so little time to indict Martha Stewart? My view is that it's easy for the government to assemble a case based on lying, and much harder with complex financial fraud where the paper trail is extensive but ambiguous. The government's approach to Enron looks like the classic case of starting at the bottom and getting people to flip on progressively higher officers. Once the prosecutors got one of the financial officers (a guy named Kopper) to plead out and to testify against Fastow, the chips fell into place. Fastow eventually gave in, and then Skilling was indicted, and now Lay.